CA IC To Cut Fee For Next Year

Oakland, CA (CompNewsNetwork) - California Insurance Commissioner Steve Poizner today announced a six percent reduction for a number of fees charged by the California Department of Insurance (CDI), including the fees paid by more than 300,000 licensed insurance agents, brokers and adjusters.

"Since my first day in office, I have worked to make the Department of Insurance more efficient and cost effective," said Commissioner Poizner. "Because of that hard work, we have cut our state operations budget by 15 percent and cut the fees used to fund the department four separate times. These fee cuts have reached a cumulative total of $22 million."

The fee cut, which will take effect on July 1, 2010, will apply to hundreds of fees charged by CDI. The most common fee is paid by agents, brokers and adjusters for their licenses. Going forward, the cost of renewing a license will decrease from $136 to $128. When Commissioner Poizner took office, this fee was $144. The total savings is estimated to be $3.4 million annually.

When Commissioner Poizner took office in January 2007, CDI staff projected that in the 2010-11 budget year, the department's Fees and License account - the largest unrestricted pool of money that pays for the department's activities - would face a $17 million deficit. When faced with this grim prediction, Commissioner Poizner undertook an effort to streamline and modernize the Department's operations. He led the department's creation of a strategic plan -- the first in recent history, conducted a top down review and undertook a business process survey. These audits created a roadmap for the CDI to achieve efficiencies and reduce costs.

Due in part to the immense efficiencies found under Commissioner Poizner's leadership, he was able to increase the overall projected fund balance in the Fees and License account by $30.8M. Consequently, Commissioner Poizner was also able to reduce revenue in the Fees and License account by a cumulative $10 million through fee cuts. As a result of these efforts, that account is now projected to have a $3.6 million surplus at the end of the 2010-11 budget year.

Today is the fourth time fees have been cut due to Commissioner Poizner's efforts to modernize and streamline CDI.

• In January 2009, Commissioner Poizner announced a six percent fee reduction for more than 300,000 licensed insurance agents, brokers and adjusters - the vast majority of whom work in California's small businesses. This specific fee had never been cut since the Insurance Commissioner became an elected position in 1990. The total savings are $3.3 million annually.
• In November 2009, Commissioner Poizner announced that fees paid to CDI's regulatory activities had been cut 9.8 percent. The fees are collected to reimburse CDI for actual costs incurred by the department. These activities include work related to rate filings, providing consumer information and assistance in resolving insurance related problems and conducting studies related to auto ratings. Because Commissioner Poizner's efforts have made the department more efficient, fewer resources are needed to complete these activities. The total savings from the 9.8 percent rate cut is expected to be $2.4 million in fiscal year 2009-10 and $2.0 million in fiscal year 2010-11.

Commissioner Poizner has reduced a fraud assessment from $5,100 to $2,100, a direct result of lower estimated operating costs. The cut will result in approximately $3.8 million in savings for ratepayers.

Share This Article: